Barriers To Entry – Flashcards
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Barriers to Entry
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Anything that prevents new competitors from easily entering an industry.
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Economies of Large Scale Production
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If a market has significant economies of scale which have already been exploited by the incumbents, new entrants are deterred.
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Vertical Integration
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Vertical integration can tie up the supply chain making it difficult for new entrants. Such as a company having its own retailer.
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Sunk Costs
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Costs that cannot be recovered once you leave the industry
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Predatory Pricing
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A firm may deliberately lower their prices to try to force other firms out of the industry
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Limit Pricing
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Products are sold by a supplier at a price lower than average cost to make it unprofitable for other players to enter the market
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Exclusive Contracts
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Agreement to sell a substantial portion of its products to a particular buyer who agrees to buy a portion of the other seller
